Revisiting the Income-Happiness Paradox: The Case of Taiwan and Malaysia

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Hock Eam Lim
Daigee Shaw
Pei-shan Liao


This paper examines Easterlin paradox and estimates the determinants of happiness in Taiwan and Malaysia using the World Values Survey (WVS) data. Descriptive statistics and ordered logit model were used to analyse data. Results revealed that income, either at individual or national level, is positively and significantly associated with happiness. Thus, there is no sufficient evidence of the existence of Easterlin paradox in Taiwan and Malaysia. Results also revealed that Taiwan and Malaysia share both similar and separate set of determinants of happiness. The determinants of happiness in Malaysia are: income, health status, marital status, employment status, religious (these determinants are similar to Taiwan), income equality and materialist (these determinants are different from Taiwan). The effect of income on happiness is found to be greater in Taiwan than Malaysia. In Taiwan, an increase of one-unit income (i.e., moving up by one decile income group) increases the odds of being happier by around 30%; in Malaysia, it is around 20%. These findings suggest that both governments’ policies which focus on income improvement are relevant in terms of happiness. In addition, government policies that aim to improve individual happiness should also target the other relevant determinants of happiness. 


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